Goldman issues warning on how quickly market confidence has recovered from an August stocks slump

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The speedy return of market confidence following a global sell-off in risky assets should be seen as a cause for concern, according to Goldman Sachs.

The speedy return of market confidence following a dramatic global sell-off in risky assets should be seen as a cause for concern, according to the head of asset allocation research at Goldman Sachs.

Speaking to CNBC's "Squawk Box Europe" on Wednesday, Goldman's Christian Mueller-Glissmann said investors could think about the early August stocks slump as something akin to "a warning shot."" linked to the Japanese yen pulled stocks off their record levels. The S&P 500 lost 3% on Aug. 5, notching its biggest one-day loss since 2022.. The S&P 500 has jumped 8% since Aug. 5, while the Dow Jones Industrial Average has climbed more than 6%.

Pedestrians walk along Wall Street near the New York Stock Exchange in New York, US, on Tuesday, Aug. 27, 2024.Asked where that leaves risk appetite for the coming months, Mueller-Glissmann replied, "What happened on Aug. 5 and around there was obviously a huge technical overreaction … so that was a buying opportunity."

"What I would say is the good news is while the S&P is back to where we were before, the complacency isn't. We're not at the same kind of extreme bullish sentiment and positioning."for a 60/40 portfolio, noted that a balanced portfolio performed "phenomenally" throughout a choppy month for markets. Yet, he cautioned that the recent buffer provided by bond markets may not be quite as reliable in the near term.

 

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